Patty Connolly's Blog
Applying for a mortgage can be a lengthy and difficult process. Lenders want to know that they are going to get a return on their investment.
To ensure that they’ll see that positive return they will take a number of things into consideration, such as your income, credit score, employment history, and financial capital.
First-time homeowners often struggle when it comes to these prerequisites since they have fewer years of numbers for lenders to consider. If you’re one of those people, don’t worry--you can still purchase a home.
First-time homeowner loans, which are guaranteed by the U.S. government, and a number of private loans enable people to borrow money for a home without paying a huge down payment or having a vast credit history.
One downfall of said loans is private mortgage insurance, or “PMI.”
In this article, we’re going to talk about what private mortgage insurance is, how to avoid it, and how to get rid of it.
What is PMI?
If you make a down payment on a mortgage that is less than 20% of the loan amount, you will most likely have to pay private mortgage insurance.
PMI exists as a way for lenders to help guarantee they won’t lose money off of your loan. If you make a down payment of 20% or more, then lenders are typically satisfied that they won’t lose money from doing business with you.
PMI is not to be confused with home insurance, which protects you against damage and theft. Rather, it is an additional fee you’ll pay to your lender each month that is added to your mortgage payment.
PMI is calculated based on a few considerations. Lenders will take into account your down payment amount, the value of the mortgage, and your credit score.
In terms of costs, PMI typically costs between .5 and 1% of the total mortgage amount each year.
Naturally, it’s best to avoid paying private mortgage insurance altogether. Private mortgage insurance has no future value for you and your family since it doesn’t count towards building equity and doesn’t protect you from any potential financial harm (your lender is the sole beneficiary of PMI).
Saving for a down payment can take time, and sometimes you’ll need to rent or cut costs while you save. However, if you do take on a loan with PMI, you can still cancel it at a later point.
Canceling your private mortgage insurance
The first thing you should know about canceling PMI is that it usually isn’t easy. You’ll need pay off at least 20% of the home, write a letter to your lender, and wait for an appraisal of the home. Once you’ve done this, you still have to wait while your lender considers your request. In all, this process could take months--months that you’re still required to pay PMI.
Once common way to get out of PMI is to refinance. If the value of your home has increased since the time of you taking on the loan, the new lender likely won’t require PMI. However, you’ll want to make sure that refinancing will get you a lower interest rate and cover the costs of refinancing.
As 2019 draws to a close, people aren't just turning the page on a new year but also a new decade. With a new decade comes new trends in the real estate industry. The 2010s were a time of drastic shifts in the real estate market. This new decade is sure to be more of the same. As a result, there are a few trends for 2020 that everyone should note.
What the Current Generation Desires
While there are people of all ages looking for houses, the majority of people currently looking for homes are members of the millennial generation. Many of these individuals and families are buying a home for the first time. Many members of this generation are looking for something specific in their home. This might be a laundry room, patio, or additional space in the garage. This also means that many people looking for homes care more about these features than they do about the overall size of the home.
Home Prices are Rising Slowly
When the real estate market crashed about ten years ago, many people were concerned. Fortunately, home prices have rebounded since then and the market has stabilized. For now, home prices are continuing to rise; however, they are rising slowly. This means that those who are looking to establish equity in their current home will continue to do so. This also means that anyone who is looking to buy a home might be able to find the house that is right for them at a discounted rate.
Mortgage Rates Remain Low
In addition, mortgage rates are remaining low as well. Mortgage rates bottomed out a few years ago and haven't changed significantly since then. This has led to a boom in the number of people looking to buy a home, providing advantages for both buyers and sellers. Some people thought that with the rapid rise in the number of people buying homes, mortgage rates would start to climb. This hasn't been the case. This is another reason why many people looking to buy a home should try to act quickly. Mortgage rates cannot go much lower.
More Work is Done Online
With more millennials looking to buy a home than ever before, it should come as no surprise that more of the work is shifting to the internet. More people than ever before are looking at listings online. As a result, anyone looking to sell a home should make sure the information on their online listing is accurate. Furthermore, people looking to purchase a home should also check out the internet listings. Of course, make sure to verify that anything posted online is accurate before acting on it!
You love your home, but you want to make a change. In many cases, you’ll work with a real estate agent who can help you to market your home professionally to your ideal home buyer. Yet, for some properties, having a very specific target buyer in mind can work well.
If you live in an area that’s ideal for retirement, for example, why not target the second home buyer’s market? These are individuals with a sizable amount of money to make purchases on their second home. They may be looking for a winter home, perhaps in someplace warm. Others are seeking a home that’s smaller but perhaps located close to the amenities they like. How can you market to these buyers if your home fits their needs?
Define What’s Fantastic About Your Home
A good place to start is by working with your real estate agent to carefully detail the features of your home that help it to really stand out to the second home buyer. Here are some ideas to get started.
- Are you close to desirable areas? Many don’t want to buy a home in a tourism-driven area directly but being nearby can be attractive.
- What’s within walking distance of your home? Are there parks, shops, coffee shops, or restaurants? Is there a Main Street area that’s perfect for an evening stroll?
- What features does the home offer to help people relax, unwind, and love being at home? A backyard that’s expansive with features, like a pond or a garden, may be an attractive option for some people. For others, easy-maintenance and upkeep are better.
Outline what makes your home special specifically to those who are buying a second home by focusing on the benefit to the buyer. Always be clear and accurate. There is no place for any misconceptions here.
Show the Value of the Property Clearly
Many people buying a second home plan to use it in various ways. For example, some want a weekend getaway, a place they can go to every weekend to relax. In this case, they likely want an area that’s enjoyable in some way. They will pay more for homes near the lake or in a walkable community.
Others want a second income from their property. In this case, homes located in the heart of a tourism district are attractive. It’s also a good idea to point out any property management services nearby that may help them to easily manage these properties. These home buyers are also looking for on-site features that attract travelers, such as pools, numerous bedrooms, a full kitchen and a spacious backyard.
Those retiring want smaller homes in beautiful areas. They want to be around others who share the same interests but also want a home that’s far easier to manage.
As you work with your agent, determine what features and specs about your home can make the property desirable to those who are retiring or buying a getaway home. Marketing like this attracts the buyer you know can fit right into your home.
Kitchens have become the new hip gathering spot in the home. With open floor plans, kitchens are combining the cooking, dining, and hanging out areas of your home and meshing them into one big room. Counters and islands have become tables, trading for fancy dining tables. People tend to congregate in the kitchen, allowing it to be the center of food, fun, and conversation. How can you make your kitchen ultra inviting? Below, you’ll find a few tips to help bring your kitchen to a new level of trendy.
Bright, Attractive Cabinets
Cabinets are one of the focal points of the kitchen. If you have bright cabinets, it attracts people to the room. The type of cabinets that you have also establish the type of style that you’re looking to create in the kitchen and possibly throughout your home. You’ll want to work the entire color palette of your kitchen around the color and style of your cabinets. As a bonus, good cabinets equal good storage. If your kitchen is organized, you’ll feel a lot happier and at ease in the room as well.
Kitchens are becoming increasingly technological. From smart, energy efficient appliances, to features of the kitchen that you can control with your smartphone, a kitchen can truly have it all. This makes entertaining a breeze. You could even get dinner going before you ever leave work! All of the new technologies that are being introduced surely make life much easier.
The type of lighting that you employ in the kitchen can set the tone for the whole room. Not only do you need good task lighting, but ambient lighting is important as well in order to attract guests to the main gathering place of the house. Whatever vibe you want your kitchen to give off works with the lighting that’s available. The kitchen certainly should never be a dark room. Consider the safety factor that’s needed in the room, then realize just how inviting a room is that is bright and airy. It’s important to plan out your lighting scheme accordingly when it comes to your kitchen.
One thing you’ll want plenty of in your kitchen is storage. This helps to reduce clutter, increase organization and makes entertaining an easier undertaking. Guests will feel more welcome as there will be ample room to sit and hang out while prepping and cooking are going on.
It seems that trends in kitchens are always changing, however, many things remain constant. The need for a clean and organized gathering area in your home will never go away.